BARRIE CASSIDY, PRESENTER: Now we'll go to our program guest, the Prime Minister Julia Gillard, who joins us from Canberra.

Prime Minister good morning, welcome.

JULIA GILLARD, PRIME MINISTER: Good morning, Barrie.

BARRIE CASSIDY: We'll start with the NDIS and yesterday Victoria signed up. What are the prospects now of WA and Queensland signing up as well?

JULIA GILLARD: Well we'll keep working hard on this, Barrie. I do want to see the national disability insurance scheme be a truly national scheme. I think the momentum is with us now to get this as the national scheme and I'll keep talking to the premiers of Queensland and Western Australia and of course the Chief Minister in the Northern Territory. And a lot of discussions are happening between officials as well to try and get agreement around the nation.

BARRIE CASSIDY: And when you say it is a national scheme, is there any scope then for the decentralisation concerns that Western Australia expresses?

JULIA GILLARD: I want to be clear; the model of this scheme is not centralised services, far from it. People with disabilities would be put in the driver's seat, they would be able to get their package of care and make choices. Local service providers would have to be responsive to their needs because they would be the ones able to make decisions.

What is centralised, if you like, is that everywhere around the country people should have the same entitlement. I don't want to end up in a situation where if you grow up in Victoria and for whatever reason your family decides to move to Western Australia, that you then get a different package of care, a different model of care. You should be able to move around the country, like everybody else is entitled to do, and experience the same level of services. So there can be no compromise on that.

BARRIE CASSIDY: Now, is it self‑evident that if revenue had not dried up to the extent that it did that it wouldn't have been necessary to have a levy?

JULIA GILLARD: I changed my mind on the levy for three reasons, Barrie. You've just pointed to one. Yes, we're getting less tax money than was anticipated, but there were two other things that were on my mind. We've been in really in detail discussions with states and territories now, not only over disability care but also our school funding and school improvement plans. That's required more transparency about state budgets than we've had in the past, and I became more and more aware the kind of burden we were asking states to shoulder for nation changing reforms, reforms we need but in their fiscal positions and tight budgets it was going to be an extra weight on their shoulders. So, I decided in introducing the levy that a quarter of what is raised would flow through in grants to states.

And then thirdly, I've spent a lot of time with advocates from disability sectors, people with disabilities, their families, their carers, people who have been calling for a national disability insurance scheme for disability care for decades now. For many of them it's been the work of their entire lifetime. And they very much urged a secure funding source and that's what the levy is.

BARRIE CASSIDY: Alright, but running out of money was important as well. Does it then follow that if and when the budget returns to a healthy surplus that the levy can go?

JULIA GILLARD: I think this needs to be there as a funding source for all of time, Barrie. That's my perspective. I think it is fair to say to Australians that you will be asked for a little bit more in order to fund something that we all benefit from.

Of course it's people with disabilities that benefit now, but Barrie, you don't know, I don't know, none of us know what the future's going to bring. Either of us could end up with a disability over the course of our lifetime. Either of us could end up with a family member with a profound disability and we would benefit from disability care.

BARRIE CASSIDY: So it's permanent, because Tony Abbott said it could go once the budget returns to a healthy surplus?

JULIA GILLARD: Well there we go again, Mr Abbott making commentary about budget matters but unfortunately we see no details and no facts.

Barrie, this morning in today's newspapers I saw that the Leader of the Opposition, Mr Abbott, said he wanted to reduce the tax to GDP (Gross Domestic Product) ratio which is currently at 22.2 per cent. Well, if he wants to reduce that by a percentage point, that's a $15 billion reduction in revenue in a year.

What would he have to cut to reduce it by a percentage point? Well, everything we spend on schools, almost everything we spend in family tax benefits. He'd have to take an axe to payments on child care, to carers, to students. Now if that's what the Leader of the Opposition wants to do he needs to detail how much it would cost every family in Australia through the loss of those services.

BARRIE CASSIDY: Sure he would have to do those things if he did it overnight but he said it's an aspiration?

JULIA GILLARD: Barrie, the obligation is on the Leader of the Opposition to not only explain this new commitment but to explain where the cuts are going...

BARRIE CASSIDY: But it's not a commitment, it's an aspiration. And what's wrong with that as an aspiration?

JULIA GILLARD: Well, Barrie, let's be very clear. The Leader of the Opposition already, through his shadow treasurer, has acknowledged on television that they've got $70 billion worth of cutbacks to do. Now, that's already cuts to the bone in areas like Medicare and the pension, health and education.

Now, if he's going to do those cuts to the bone and then aspire to do more, he's got an obligation to detail what that would do to Australian families.

BARRIE CASSIDY: Just on - back to the NDIS and on funding; you start collecting from July next year and you won't spend that money for some years after that. So what happens to the money in the meantime and how secure will it be?

JULIA GILLARD: We've said it would go into a special account and it would be held there and every cent raised would be spent on disability care.

BARRIE CASSIDY: OK. Now I want to also ask you about the way that the issue is handled this week, and even though you secured the funding the process, do you accept, was sullied by politics?

JULIA GILLARD: All this has ever been about from my point of view is changing something in our nation that is currently wrong and I want to see it put right.

I've been very moved personally by meeting people with disabilities, meeting their family members, seeing the struggle that they go through in their lives. I mean it's just incredible the courage you see on display. I don't know if in those circumstances I could show the amount of courage that some of the people I've met have shown in trying to overcome their disabilities. Now, what they want is a nation that's good enough to partner with them and provide the supports that they need.

There's nothing new in this. This was a call when the Howard government was in office, it's been a continuing call over decades. I listened to that call and I've worked to get this done, Barrie. I was surprised when the Opposition indicated they were prepared to move on the Medicare levy. And given that they changed their mind and changed their position over the course of a week, then of course, I'm prepared to step up and take that commitment from the Opposition and use it to secure the funding source.

BARRIE CASSIDY: And you said you were surprised and you built your tactics around them saying no.

JULIA GILLARD: Barrie, I actually listen to what the Opposition says, and maybe I'm the only person in Australia who does it, but when they make statements I take them seriously.

And so the Leader of the Opposition was out there campaigning already complaining about the possibility of a new tax. The shadow treasurer was on radio saying it would hurt the economy. Now I took them at their word. I thought those words were meaningful. I thought those words indicated a predisposition to oppose the levy. Indeed I don't understand how any person of reason could read those words any other way. The Leader of the Opposition changed his mind, that's a good thing, and as a result of it we'll get it done.

BARRIE CASSIDY: I think most of those words you referred to were said after you'd agreed on your tactics. You insisted if the Coalition did not support the bill you would not introduce it, even though you almost certainly had the numbers without them. Now why would you do that? Why would you leave a funding issue to an election that you could easily lose when you have the numbers now?

JULIA GILLARD: My view was it would have been the cruellest of things to go to the Parliament in circumstances where this was opposed by the Opposition and say to the Australian people, and particularly the 410,000 people with disabilities, 'this is here today and possibly gone tomorrow depending on the outcome of the election'. I wanted, once we did this, to be able to say to people with disabilities and the whole Australian nation, it is done and it is done for all time.

Now, I could only be in that position if there was genuine bipartisanship, this side of the election, or if the Australian people spoke very loudly on it at the election. I am pleased to see that that genuine bipartisanship has been reached, following the Opposition changing its mind during the week.

BARRIE CASSIDY: Sure, but you're the Prime Minister, you're running the country, why would you take so seriously the real prospect, I suppose, there is a prospect of losing at the next election. You're already building in contingency arrangements for when you lose at the next election?

JULIA GILLARD: Barrie, that's not true and I'm going to that election to win. And that election will be a very clear choice for the Australian people between me and a majority Labor government with a very clear plan for jobs and opportunity in our nation's future and a clear plan for the services that families rely on, compared with the plans of the Leader of the Opposition we've canvassed during this interview to cut to the bone. That will be the choice.

On DisabilityCare, people have campaigned for a long, long time, decades, many have devoted their lives to this campaign. This campaign has fallen on stony ground until this Government. And I wasn't going to see those people put in a position where I squeaked a bit of legislation through the Parliament and then they worried whether or not it would be taken away. It's good to see that there's bipartisanship around it.

Now, I note, as that bipartisanship has broken out around the Medicare levy, that the Leader of the Opposition has basically said well, it's my job as Prime Minister to keep building this scheme. And damn right, I'll keep doing that, Barrie, that is my job as Prime Minister. I take it very seriously. We're the ones that have already got the productivity commission report, responded to it, budgeted to get $1 billion when it wasn't easy for launch sites, negotiated the launch sites arrangements around the country, so people will start benefiting from the 1st July. And now state after state, jurisdiction after jurisdiction I'm the one going out and getting the agreements that means this can roll out around the country now to almost 70 per cent of the population.

So yes, I'm building the national disability insurance scheme, disability care, and I'm very proud to do it.

BARRIE CASSIDY: When is changing your mind not a broken promise?

JULIA GILLARD: Well, Barrie, you and the commentators will no doubt canvass around that endlessly and the way our political dialogue does chew over these questions, and more power to your arm, good luck to you. In my view what I need to do as Prime Minister is deal with these things called facts.

Now I know that isn't accepted by all sides of politics. We're there dealing with the facts, the other side of politics fluffing around with the nonsense, but the facts do matter to me. And as the facts emerge and the facts get crystallised and the facts change, then I'm prepared to change my mind in the interests of the Australian nation.

BARRIE CASSIDY: Alright, in the same spirit, the facts, the facts on gay marriage, about 60 per cent of Australians want a change to that law, would you change your mind on that?

JULIA GILLARD: What I can do here, and I've already done it, is ensured that there will be a conscience vote in the Labor Party, there was a conscience vote when it came to the Parliament. I don't seek to impose my view on anyone. I've never asked a member of my political party to vote with me on this. I never will. I go to the other extreme of saying it's all up to you, you make up your minds.

But when we look around the world here and yes, I think world attitudes are changing, Barrie. But when we look around the world and those countries that have moved towards same‑sex marriage, the key factor is that politicians have had conscience votes including on the conservative side of politics. Look at New Zealand, prime minister Key, I know him well, conservative sister political party of the Liberal Party here - he gave his people a conscience vote.

That's what we need to see done in Australia, and there's been incredibly mixed messages about that. A little flirtation with a conscience vote and now the Leader of the Opposition appearing to pull back from that and saying oh, no, there won't even be a vote at all in the next Parliament. Well this does matter to many Australians. I think you have an obligation to be clear with them. I'm clear about my position and about how my members are allowed to vote. I think the Leader of the Opposition owes people the same courtesy.

BARRIE CASSIDY: You talked about mixed messages on that issue, but what about on the economy and with a budget coming up. You insist the economy is sound on the one hand and yet in your speech you said decisions you have to take in the budget are urgent and grave. Why grave if the economy is sound?

JULIA GILLARD: The economy has growth rates in it, we've got an economy that's now 13 per cent bigger than when we came to office. And given we've lived through the global financial crisis that's a statistic we should all be proud of.

And I know that many people say oh, that's just because the minerals have been doing well. Look at a resource‑rich economy like Canada's, very comparable to Australia's. Over the same time period they've seen 5 per cent growth, we've seen 13 per cent growth, and we are continuing to grow at around 3 per cent. But there are...

BARRIE CASSIDY: So I go back to the point why grave then? Why use the word grave?

JULIA GILLARD: Because even in that growing economy there are plenty of pressures on because our currency has appreciated, grown in value by around 50 per cent.

So if you're in the manufacturing business, if you're trying to export, then your customers are basically paying 50 per cent more for your products or services just because of a movement in our currency, not because you are charging more in your costs. That is a really tough pressure. It is meaning for businesses that they are less profitable, that is meaning that there is less tax money coming into the Government than was expected. That means you do face grave decisions as you address budget questions.

We're up to doing that because we are dealing with the facts. We've done it before, garnering savings of more than $150 billion over the budgets we've done. We've done that in a way that preserves the services that families really rely on; that's a Labor approach and we will take it to this budget: jobs at the forefront, looking after Australians always guiding us.

BARRIE CASSIDY: And yet you do say you won't be cutting to the bone, that doesn't sound all that grave?

JULIA GILLARD: That's because we get the decisions right, Barrie. The contrast here, I think, is between a Government that makes responsible savings and wise investments, like what I want to do for Australia's schoolchildren, improving the quality of school education, versus the slash and burn that we see on the other side of politics.

I will go to Queensland today. If you want to see slash and burn under a Liberal government go and ask the people of Queensland. And that's just a starter for the kind of things that people would have to live through if government did change later this year.

BARRIE CASSIDY: Now just finally, there was more speculation over the weekend that we're headed for a, well, at least the Government is headed for a big loss in September, some 40 to 45 seats is one estimation. And we do read that many in your own party expect as much. Do you detect that sense of foreboding among some of your colleagues?

JULIA GILLARD: It's been politically tough for us, Barrie, and it will continue to be politically tough. I think that's obvious.

We've faced a relentlessly negative Opposition, we face the unusual circumstances of a minority parliament, and we've done some big things, not necessarily popular things, to get the nation in the right position to seize all of the opportunities that will come in this time of change in our region. We're going to see spectacular growth in demand in Asia. I want us to be the winners out of that and I've done some tough things, some unpopular things to get us in that position.

But when people vote in September a lot of the white noise that is in politics and has been in politics over the last few years will fall away, people will be there in a polling place with the ballot paper in front of them and it will be a very clear choice. Do I want me, as Prime Minister, Julia Gillard, a majority Labor government, a focus on jobs and growth and on the services my family needs, a clear plan for the future or do I want the Leader of the Opposition, Mr Abbott, with his very clear plan for cutbacks. People will make their choice then and I am approaching this election with a spirit to win.

I believe we can win because at the end of the day Australians are a smart people, the facts matter, the policies matter and there we are with the right answers.

BARRIE CASSIDY: But are you struggling to inject that same sort of spirit into the minds of some of your colleagues?

JULIA GILLARD: My job's to lead by example, Barrie, and I will be doing that. I'm doing it here and I'll do it every day. We've got to get out and win this. And yes, we are not in a period where it's any time for the faint hearted.

But just as I've done some things that people haven't expected - you know, I listen to this negative commentary all the time. I got told for 12 months our relationship with China was in ruins, it was in tatters. I go to China and pull off things that people weren't expecting and everybody goes 'oh, well, that's a bit interesting.' I get told Gonski's dead in the water. I go to New South Wales and get an agreement with Premier O'Farrell. I get told we won't get disability care done, that we can't actually get agreement for the levy, and there we are, we've done it during the course of this week. So I'm pretty used to the negative chit chat, Barrie, and I'm pretty used to prevailing against that negative chit chat and I'll do that again in September.